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TNB wins appeal to set aside RM4 million over economic loss claim

The Court of Appeal says Tenaga Nasional Berhad could not be held liable for Southern Steel Berhad's claim that it suffered losses resulting from power cuts.

2 minute read
Istana Kehakiman in Putrajaya which houses the Federal Court and Court of Appeal. Photo: AFP
Istana Kehakiman in Putrajaya which houses the Federal Court and Court of Appeal. Photo: AFP

Tenaga Nasional Bhd (TNB) has won its appeal to set aside a High Court order for it to pay RM4 million in damages to a steel manufacturing company for alleged negligence over disruption of electricity supply to its factory premises.

A three-member panel of the Court of Appeal comprising justices Abdul Karim Abdul Jalil, Abu Bakar Jais and M Gunalan allowed TNB's appeal to set aside the High Court's decision after ruling that TNB could not be held liable for Southern Steel Berhad's (SSB) claim.

It also set aside the High Court's order for UEM Construction Sdn Bhd to indemnify TNB amounting to RM2 million in respect of TNB's liability to SSB.

In the Court of Appeal grounds of judgment dated May 3 this year, justice Abu Bakar said SSB's claim for damages for tort of negligence could not stand as it was based on pure economic loss.

"Looking at the pleading, it could not be denied that the relief sought by SSB was not for financial loss due directly to physical damage to SSB's property," he said, adding that the court would be minded to allow damages for SSB if the company had pleaded for physical damage as a result of disruption of electricity supply.

Justice Abu Bakar said there was no obligation on TNB to pay RM4 million in damages to SSB. He also said since TNB is not liable to SSB, the order by the High Court against UEM Construction to indemnify TNB must also be set aside.

The panel also dismissed SSB's appeal against the quantum of damages awarded to them by the High Court. SSB had claimed for over RM8 million in general damages and/or special damages against TNB.

SSB filed a lawsuit against TNB alleging that the utility company failed to supply electricity to its factory premises over a one-week period from Aug 26, 2008 to Sept 1, 2008.

The company claimed that they could not produce steel and suffered losses due to the power cut.

Meanwhile, TNB brought in UEM Construction as a third party in SBB's lawsuit to bear any liability as TNB claimed that UEM Construction had caused the failure of electricity supply to SSB.

TNB claimed that the electricity supply stoppage was due to negligence of the third party when they were carrying out construction work that caused damage to the TNB cables that supplied electricity to the SSB premises.

In 2015, the High Court allowed SSB's claim against TNB and ordered the utility company to pay RM4 million in damages to SSB. 

It also allowed TNB's claim against UEM Construction and ordered UEM Construction to bear half of the RM4 million after finding the company to be 50% contributory negligence to the accident that caused damage to TNB cables which directly resulted in disruptions to the electricity supply to SSB factory premises.